Constructive Termination of Executive Clause Samples
The Constructive Termination of Executive clause defines the circumstances under which an executive may resign but still be entitled to severance benefits as if they were terminated without cause. Typically, this clause applies when the employer makes significant adverse changes to the executive’s role, compensation, or work conditions, such as a demotion, pay cut, or forced relocation. Its core function is to protect executives from indirect forms of dismissal, ensuring they are not deprived of contractual benefits if their employment situation is materially worsened by the employer.
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Constructive Termination of Executive. In the event the Company removes Executive from the position of Chief Executive Officer, President, or Director of the Company without his consent (or fails to re-elect Executive as President and Chief Executive Officer at any meeting of the Board of Directors of the Company held for the purpose of electing or re-electing officers of the Company) or substantially changes his duties or his reporting responsibility to the Board of Directors under Section 2.1, the employment of Executive, at his option, exercisable by written notice given to the Company at any time within sixty (60) days following such event (time of notice being deemed to be of the essence), shall be deemed to have been constructively terminated by the Company hereunder, as of the date of Executive's notice; provided, however, that such constructive termination shall not be deemed a breach by the Company of its obligations under this Agreement and further provided, however, that termination for cause pursuant to Section 9.3 shall make the provisions of this Section 9.5 inapplicable. If Executive's employment is terminated under this Section 9.5, the Company shall continue to pay Executive his Basic Salary and provide health insurance benefits as provided in this Agreement for a period of eighteen (18) months from the Termination Date, and shall promptly reimburse any previously unreimbursed business expenses. Executive's right to receive Incentive Bonus for each completed Employment Year shall remain in effect, and Executive's right to receive Incentive Bonus on account of the year of his termination shall be prorated to the date of such termination. In addition, the Option granted to Executive pursuant to Section 8 hereof shall be deemed to have become fully vested in him pursuant to and subject to the provisions of such Section.
Constructive Termination of Executive. The Executive shall have the right to terminate this Agreement due to a Constructive Termination. For purposes of this Agreement, “Constructive Termination” means the occurrence, without the Executive’s express written consent, of any one or more of the following events: